Capital Markets Insights

Build versus Buy White-label Crowdfunding Platform Part1

 

Katipult is cloud-based software infrastructure that allows firms to design, setup, and manage an investment crowdfunding platform. As a crowdfunding software provider we talk to private equity, asset management, banks, and entrepreneurs on a daily basis who are looking for investment crowdfunding, private placements, and investor management solutions.

Having transitioned from the finance industry to software almost 10 years ago, I fully understand that there is a large knowledge gap when it comes to software. I climbed this same curve myself and I’m still learning everyday so I’ll attempt to breakdown the white-label crowdfunding industry and the build versus buy dilemma and the incorrect assumptions many people have.

Similar to the finance industry, software is extremely complex and diverse. Remove your assumption that things are easy because they are digital. Let’s consider the following items before we can decide if both build versus buy are even feasible options:

BUILD

  • Project Risk - custom software development projects are notorious for going over time and over budget. A large percentage are also never completed and abandoned. Having spent years in custom software development this risk is apparent, and large firms who put up the funds to create their own technology put as many safeguards in place as possible to avoid a poor outcome and loss of investment. If you are thinking about building an investment crowdfunding platform understand custom builds are very risky.

Key Takeaway - custom software projects are very high risk in nature.

Katipult eliminates project risk.

  • Qualifications - what are your personal credentials and experience in custom software development? What are the credentials of the software firm your are looking to engage? The software industry is the only industry I’ve heard people compare a programming student with an actual software firm with a 10 year track record. Building a good product will take at least four staff members (2 back-end developers, 1 front-end developer, and 1 project manager). Always have a project manager in the team to keep the programming team organized. You’ll need to keep at least 2 full time positions once the platform is launched (1 back-end developer, 1 front-end developer).

Key Takeaway - you need a qualified team with the credentials and a track record.

Katipult is a qualified team with an extensive track record in both software development and capital markets

  • Scope & Timelines  - the scope of this development is likely much greater than you think. For a decent product you are looking at a 9 month minimum development horizon. Many firms may quote 4-5 months as long term projects scare customers off. Large scale software projects typically take 9 -15 months once fully planned and that is only the initial build. Getting the product done is step 1 but don’t overlook the need to reiterate and revisit areas of the software to improve afterwards. Software projects are ongoing investments so every year you will need to invest in the product.

Key Takeaway - prepare to launch your investment crowdfunding platform about a year after you start development.

Katipult can get you launched in about 7 weeks.

  • Human Resources - reputable firms have turnover, contractors disappear, and overseas development is poor quality and a massive headache to get right. Understand you will need to manage the people involved in the project closely. You will also need to invest a lot of time yourself to ensure the team understands your business needs and can execute. Compliance and finance knowledge aren’t commonplace in the programming community as its industry specific so it takes time.

Key Takeaway - long term projects are fluid so be prepared for turnover. Do not outsource overseas.

Katipult manages your software so you can focus on your business

  • Costs - you are looking at a minimum $250,000-300,000K price tag to custom build an investment platform. You are not going to create a product for $50,000 or $100,000. Any of the platforms that are successful and were built with internal teams likely spent a lot more than quoted here. For example, Capbridge in Singapore received a $1.5 million grant to develop its platform:

http://www.crowdfundinsider.com/2015/06/70141-singapore-exchange-provides-clearbridge-accelerator-a-s1-5m-grant-to-develop-equity-crowdfunding-platform-capbridge/

Key Takeaway - you get what you pay for but $250,000 is a realistic budget for a prototype

Katipult provides a comprehensive, high quality platform for a reasonable fee


Continue reading...


Author

Brock Murray is the CEO of Katipult and former CEO of JOI Media, an award winning custom software development firm. Prior to his entrepreneurial ventures, Brock amassed extensive experience in capital markets as an institutional equity research analyst.

About Katipult

Katipult is a crowdfunding software solution for private placements, investment crowdfunding, investor management, and listings. Katipult allows companies to design, setup, and manage an investment crowdfunding platform across multiple distribution channels including web, mobile, and social media. Katipult is being used in over 20 unique regulatory environments to grow investor networks, efficiently manage investors, and streamline deal flow administration.

www.katipult.com